When developing a corporate travel policy, the temptation to throw something together and call it a day is strong. However, travellers, executives, and administrators will consider your policy when making future decisions. It can either help you streamline reporting and tracking, or it can have no effect at all.
By adopting static budgets that assign a predetermined amount for each trip, most companies are still losing money and sacrificing their employees' comfort. For this reason, we believe that having a dynamic policy would be beneficial.
A dynamic corporate travel policy is like a traditional business travel policy, minus the limitations that can't be modified. Because they can take advantage of what's available at the time of booking, this gives business travellers greater flexibility and freedom of choice. Let's look into it more closely.
What Are Some Benefits of Having a Dynamic Policy?
A significant portion of your company's budget is probably dedicated to business trips. This is true for most firms, and it's not hard to see why: It's a key growth strategy for the organisation.
Travel gives employees the chance to meet new people, close sales, and help the business expand. For finance managers and a CFO focused on making money, corporate travel can be a pain in the neck. It doesn't have to be that way at all.
By having a dynamic travel policy, your organisation can reap the following benefits:
Increased Level of Policy Compliance With Less Leakage
Do you have a copy of the company's travel policy on hand? It's not likely. You'll probably find it in an enormous guidebook or PDF tucked away in a shared folder with a great deal of fine print.
For the sake of keeping travel and expense costs under control, company policies have gotten increasingly specific, covering every scenario and issue that could arise. Their rigidity and failure to adapt to real-world business scenarios render them ineffective.
Trying to impose a strict policy on a new employee might be a difficult transition. Furthermore, it has a significant impact on out-of-policy bookings and leaks. Expenses made outside the approved channels are known as "leakage" and are often not included in financial reporting.
Autonomy for Travellers
Companies now place a higher emphasis on business culture than ever, and they want to foster an atmosphere of openness, adaptability, and confidence among their employees. This might be considered an important part of a healthy culture of "give and take" for those who are frequently on the go.
Dynamic travel policies encourage employees to take ownership of their work and make decisions that benefit the company as a whole and increase revenue and profits.
For example, even if a hotel near the airport is cheaper than staying in the city, it may not always be the best option for the business or the employee. Or, an expensive Michelin-starred restaurant dinner with an important client may be suitable, considering their company's upcoming deal in the millions.
A fixed budget cannot keep pace with the rapid changing of rates. In the world of corporate travel, a hotel room could be discounted one day and then marked up by 10% the next. Travel dates also greatly impact the total cost of a trip.
With a dynamic travel policy, you can establish a system that's more open and responsive to market rates, allowing your employees greater flexibility and comfort while also ensuring that your business trips have a more equitable and sustainable financial base.
How To Create a Dynamic Policy
Consider the following points before you begin developing a dynamic travel policy for your company:
One of the most important elements in determining the cost of accommodations and transportation is the time of year you travel. This means that trips during Easter, Christmas, and summer should have larger budgets because of the increased hotel rates and more costly flights during these periods.
In addition, you must analyse the tourism trend of each place to see if costs skyrocket on other occasions. However, no matter what time of year it is, you should also think about which days your employees will be on the road.
According to Skyscanner, you can save up to 21% on flight tickets by flying on a Friday in the UK. If you're on a tight budget, you might want to avoid travelling on a Tuesday, which has overtaken Sunday as the priciest day to do so. In fact, Brits can save up to 11% by moving from a Tuesday to a Friday flight.
Consider these savings when drafting your dynamic policy.
Your company's travel costs and the requirements of your employees will also vary depending on the trip's location. Here are some factors you'll need to consider:
- Is it a domestic or international trip?
- Is it a popular tourist hotspot or a less-visited city?
- Is your team going to be attending an international expo or a web conference?
Costs for lodging, flights, local transportation, and other ancillary services are all influenced by these aspects. Your employees' requirements en route will also be affected by the end destination, which can lead to various expenses.
Location and Additional Services
Finally, keep in mind the specific requirements of every team member on each journey.
If your team members are attending a trade show or conference, for example, make sure they book a hotel close to the venue. On the other hand, if their itinerary is jam-packed with meetings with partners, a hotel with office spaces and conference rooms may be a better choice.
A dynamic policy should consider these varying requirements, which will impact each trip's costs.
For new businesses or those who have recently decided to launch a corporate travel program, it's critical to have a clear travel policy in place. Doing so can help you better manage your firm's finances, resulting in more stability and profitability.
But as useful as they are, traditional travel policies aren't always the best way. That's where dynamic policies come in.
Adopting a dynamic travel policy that changes based on the alternatives available at the time of booking would boost policy compliance, reduce leakage, and allow for greater traveller autonomy and flexibility.